## Facts

- Tenants leased a Baltimore City tavern/restaurant and an upstairs apartment from the landlord under a written commercial lease.
- The lease barred assignment or subletting without the landlord’s prior written consent but stated no standard governing consent.
- The tenants later sought written permission to sublease the upstairs apartment to a proposed subtenant.
- The landlord did not assess the proposed subtenant and instead conditioned consent on a $150/month rent increase.
- Believing the demand improper, the tenants permitted the proposed subtenant to occupy without written consent.
- The landlord sued for repossession based on breach of the no-subletting-without-consent clause.
- At trial, the tenants offered testimony about the landlord’s earlier explanation that the clause was intended to prevent damage to the apartment; the court refused to consider it and construed the lease strictly from its text.

## Issues

1. Under a lease requiring the landlord’s consent to a sublease but otherwise silent, may the landlord withhold consent arbitrarily, or is consent subject to an implied reasonableness requirement?
2. If reasonableness is required, is refusing consent solely to obtain a rent increase unreasonable?

## Decision

- The Court of Appeals of Maryland reversed the judgments for the landlord and remanded.
- The court overruled prior Maryland precedent permitting arbitrary refusal under a silent consent clause.
- The court held that, absent express lease language granting an unfettered right to refuse, a landlord must act reasonably in withholding consent to an assignment or sublease.
- The landlord’s refusal to consent solely to extract an additional $150 per month was unreasonable.

## Legal Principles

- Restrictions on transfer of leasehold interests are disfavored and are construed narrowly in light of the policy against restraints on alienation.
- When a lease requires landlord consent to transfer but is silent on standards, the landlord’s withholding of consent is subject to an implied reasonableness limitation unless the lease expressly allows arbitrary refusal.
- Contract performance is constrained by an implied obligation of good faith and fair dealing; using a consent clause to demand a side payment unrelated to the transferee’s suitability violates that obligation.
- Reasonable grounds for refusal commonly include concerns about the transferee’s financial responsibility or the suitability/legality of the proposed use; demanding a rent increase as the price of consent is not a permissible ground absent explicit contractual authorization.
- Parties may contract around the default rule by clearly stating that consent may be withheld for any reason or no reason.

## Conclusion

Maryland requires a landlord to act reasonably when withholding consent under a lease clause that requires consent to sublease or assign but does not expressly permit arbitrary refusal, and conditioning consent on a rent increase is unreasonable.


Julian v. Christopher, 320 Md. 1, 575 A.2d 735 (Md. 1990)